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What is CRM?

For a long time, marketers implemented their 4Ps strategy to attract and satisfy their target customers. But post-liberalization, the highly competitive and dynamic business
environment has forced the businesses to think not only to attract but also to retain their customers, especially profitable ones. This approach of businesses to build, and maintain one-to-one life-long relationship with their large number of customers has led to the emergence of a new term CRM, which stands for Customer Relationship Management. This change in perspective is also supported by research findings that it costs up to 6-8 times more to attract a new customer than to retain an existing customer (Gruen, 1997). Moreover, studies have shown that a small proportion of the customer base (20% or less) accounts for more than 70-80% of firm's revenues and profits.

CRM, as concept, according to Scoot Fletcher, started gaining prominence in early 1997, and emerged as a management buzz and a topic of interest among business firms, media, software vendors, management gurus and academic institutions.

In words of Parvatiyar and Seth (2001), "CRM is a comprehensive strategy and process of acquiring, retaining, and partnering with selective customers to create superior value for the company and the customer." It is a process or methodology used to learn more about customers' needs and behaviors in order to develop stronger relationships with them.

Greenleaf and Winer (2002) have explained CRM as, "Customer Relationship Management is a business strategy to select and manage customers to optimize long-term value." CRM is a business approach that integrates people, processes, and technology to maximize the relations of an organization with all types of customers.

CRM in Retailing

Levy and Weitz, authors of "Retailing Management", define CRM as, "A business philosophy and set of strategies, programs, and systems that focuses on identifying and building loyalty with a retailer's profitable customers." It is based on the business philosophy that all customers are not profitable in the same way and retailers' can increase their profitability by building relationships with their better customers. The goal is to develop a base of loyal customers who patronize the retailer frequently.

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Mujib-ur Rahman is currently a faculty member at Department of Management Studies, B. S. Anangpuria Institute of Technology & Management, Faridabad.